Sunday, July 18, 2010

Andy Grove is Right about Manufacturing

National Center for Manufacturing Sciences (Jarman) - Recently Andy Grove wrote a great article about the danger of marginalizing the domestic manufacturing sector- How to Make an American Job Before It's Too Late: Andy Grove.  Grove, who co-founded Intel in 1968, has first hand experience on how difficult it is for companies to grow and create jobs.
"The underlying problem isn’t simply lower Asian costs. It’s our own misplaced faith in the power of startups to create U.S. jobs. Americans love the idea of the guys in the garage inventing something that changes the world. New York Times columnist Thomas L. Friedman recently encapsulated this view in a piece called “Start-Ups, Not Bailouts.” His argument: Let tired old companies that do commodity manufacturing die if they have to. If Washington really wants to create jobs, he wrote, it should back startups."
Andy is right and Thomas Friedman is wrong.  Do the math! Only about 2 in 10 start-ups succeed and most fail to employ more than five people in the first five years. A 20% business success rate only creates hundreds of jobs at best.  We would need tens of thousands of successful start-ups to make a substantial impact on our economy...
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1 comment:

  1. Harry MoserJuly 20, 2010 at 12:51 PM

    The most efficient and immediate way to bring manufacturing back is by re-shoring: making in the U.S. more of what we now import. By reducing imports, we will achieve a much more sustainable recovery than by additional government spending. Rather than increasing debt, we will reduce spending and increase tax revenue.
    The NTMA (National Tooling and Machining Association), PMA (Precision Metalforming Association) and AMT (Association for Manufacturing Technology), just held a re-shoring Purchasing Fair in Irvine, CA. The next Fair will be in Mashantucket, CT on Oct 29. See www.purchasing fair.com. Large companies bring out work that is now off-shored. Hundreds of attending U.S. shops then bid on the work. Sixty four percent of the large companies at the Irvine Fair brought work that was currently offshored.
    A major reason for offshoring is faulty accounting of the comparative costs. To help the companies make better sourcing decisions we also made available the first draft of a TCO (Total Cost of Ownership) Estimator that helps the large companies perform the complex calculation of the real offshoring impact on their P&L.
    If your company now off-shores machining or tooling production, suggest to your Supply Chain Manager or Purchasing Dept. that they attend the Fair and request the TCO Estimator.
    You can reach me at harry.moser@comcast.net
    Harry Moser, Chairman Emeritus, Agie Charmilles LLC

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